Small businesses struggling to access credit are to be given a welcome boost with £110 million of new funding, Vince Cable announced today.
The Business Secretary pledged £55 million of Government funding – through a scheme called the Business Finance Partnership – to peer to peer lenders and other finance suppliers.
Match-funding from the private sector is expected to lever in a minimum of £55 million, making at least £110 million available to lend to small businesses over the coming years.
The first four successful bidders for the Business Finance Partnership funds are:
· Funding Circle, which will receive £20 million. It is a peer-to-peer lender enabling British people to lend money directly to small businesses in the UK and offers a faster and more efficient way for businesses to borrow finance
· Zopa will receive £10 million to offer in loans through peer-to-peer lending. Through its website investors can lend directly to small businesses, offering a more efficient way of helping firms to access loans
· BOOST&Co, a new fund management company focused on lending to growing and innovative small businesses, will receive £20 million to set up a fund that will make loans between £1 million and £8 million to small businesses
· Credit Asset Management Limited, a subsidiary of City of London Group plc which provides specialist financing to the SME sector, will receive £5 million to provide asset finance and professions loans.
Business Secretary Vince Cable said:
“Small and medium sized businesses need access to a diverse range of finance options, including non-bank lending. These new forms of finance are still small in scale today but they should, over time, bring additional choice and greater competition to the lending market.
“Today’s funding announcement is just the type of help that the new Business Bank will offer. The bank, which will be operational by 2014, is being designed to tackle these long-standing, structural gaps in the supply of finance for SMEs.”
The Business Finance Partnership is a £100 million fund. The Government expects to announce the allocation of the remaining £45 million in the New Year once due diligence is completed on the remaining bids still being considered.
The Business Secretary, who was speaking at the Association of British Insurers’ Investment Conference, also announced that a network of 1,000 Business Finance Advisors is to be launched to help small businesses identify the best type of finance to support their needs.